84) Increasing the number of periods will increase all of the following except
A) the present value of an annuity.
B) the present value of $1.
C) the future value of $1.
D) the future value of an annuity.
85) Joe Nautilus has $210,000 and wants to retire. What approximate return must his money earn
so he may receive annual benefits of $30,000 for the next 10 years?
A) Greater than 10%
B) Between 8% and 10%
C) Between 6% and 8%
D) Lower than 6%
86) You will deposit $2,000 today. It will grow for five years at 12% interest, but compounded
semiannually. You will then withdraw the funds annually over the next four years at the end of
each year, with an annual interest rate of 8%. Your annual withdrawal will be approximately
________.
A) $2,340
B) $4,332
C) $797
D) $1,082
87) You will deposit $200,000 today. It will grow for five years at 12% interest, but compounded
semiannually. What will your investment grow to?
A) $111,600
B) $1,120,000
C) $352,468
D) $358,200
88) Carol Thomas will pay out $6,000 at the end of year two and $8,000 at the end of year three.
Then Carol will receive $10,000 at the end of year four. With an interest rate of 10%, what is the
net value of the payments versus receipts in today’s dollars?
A) ($7,326)
B) ($10,242)
C) ($17,794)
D) ($4,134)
89) John Doeber borrowed $150,000 to buy a house. His loan cost was 16% annually because of
his bad credit score. He promised to repay the loan in 5 years on a quarterly basis. How much are
the quarterly payments?
A) $11,453
B) $45,811
C) $13,113
D) $11,038
90) John Doeber borrowed $150,000 to buy a house. His loan cost was 6% and he promised to
repay the loan in 10 equal annual payments. What is the principal outstanding after the first loan
payment?
A) $143,555
B) $134,560
C) $141,200
D) $138,620
91) John Doeber borrowed $150,000 to buy a house. His loan cost was 6% and he promised to
repay the loan in 10 equal annual payments. What are John’s annual payment amounts?
A) $15,000
B) $20,380
C) $15,445
D) $11,453
92) A home buyer signed a 20-year, 8% mortgage for $72,500. Given the following information,
how much should the annual loan payments be?
A) $1,584
B) $7,384
C) $15,555
D) $15,588
93) A retirement plan guarantees to pay to you or your estate a fixed amount for 20 years. At the
time of retirement, you will have $73,425. The plan anticipates earning 8% interest. Given the
following information, how much will you be able to take out on an annual basis while you are
retired?
A) $1,435
B) $13,070
C) $7,479
D) $13,102
94) After 10 years, some shares of stock originally purchased for $500 total were sold for $900
total. What was the yield on the investment? Choose the closest answer.
A) 10%
B) 4%
C) 8%
D) 6%
95) Dr. Stein has just invested $10,000 for his son (age 7). The money will be used for his son’s
education 10 years from now. He calculates that he will need $21,598 for his son’s education by
the time the boy goes to school. What rate of return will Dr. Stein need to achieve this goal?
Choose the closest answer.
A) 10%
B) 8%
C) 4%
D) 1%
96) The future value of a $500 investment today at 8% annual interest compounded semiannually
for five years is ________.
A) $805
B) $814
C) $740
D) $923
97) Dan would like to save $1,500,000 by the time he retires in 30 years and believes he can earn
an annual return of 8%. How much does he need to invest in each of the following years to
achieve his goal?
A) $13,241
B) $133,239
C) $10,727
D) $52,450
98) Sydney saved $10,000 during her first year of work after college and plans to invest it for her
retirement in 20 years. How much will she have available for retirement if she can make 8% on
her investment?
A) $2,150
B) $457,620
C) $46,610
D) $217,250
99) Luke believes that he can invest $5,000 per year for his retirement in 30 years. How much
will he have available for retirement if he can earn 8% on his investment and begins investing
one year from now?
A) $566,400
B) $681,550
C) $150,000
D) $162,000
100) Ian would like to save $2,000,000 by the time he retires in 30 years. If he believes that he
can achieve a 6% rate of return, how much does he need to deposit each year, starting one year
from now, to achieve his goal?
A) $12,065
B) $37,500
C) $5,790
D) $25,298
101) Jeff believes he will need a $60,000 annual income during retirement. If he can achieve a
6% return during retirement and believes he will live 20 years after retirement, how much does
he need to save by the time he retires? Assume he’ll start drawing his money out one year after
his retirement.
A) $724,055
B) $1,600,000
C) $688,200
D) $209,320
102) If Allison has saved $1,000,000 upon retirement, how much money can she live on each
year if she can earn 4% per year and will end with $0 when she expects to die 30 years after
retirement?
A) $40,000
B) $20,953
C) $17,830
D) $57,830
103) Kathy has $50,000 to invest today and would like to determine whether it is realistic for her
to achieve her goal of buying a home for $150,000 in 10 years with this investment. What return
must she achieve in order to buy her home in 10 years?
A) Above 10%
B) Between 8% to 10%
C) Exactly 10%
D) Below 8%
104) If Gerry makes a deposit of $1,500 at the end of each quarter for five years, how much will
he have at the end of the five years assuming a 12% annual return and quarterly compounding?
A) $40,305
B) $30,000
C) $108,078
D) $161,220
105) Sara would like to evaluate the performance of her portfolio over the past 10 years. What
compound annual rate of return has she achieved if she invested $12,000 ten years ago and now
has $25,000?
A) Between 4% and 6%
B) Above 10%
C) Between 8% and 10%
D) Between 6% and 8%